Questions for Gordon Brown on his proposals


30-11-1999

Richard Baron, Institute of Directors - 'You have introduced a number of initiatives and special tax reliefs eg corporate venturing, R&D.

Do you see these as correcting perceived market imperfections or as giving people a good nudge in the right direction.'



Chancellor's response: 'Moving form R&D tax relief to R&D tax credit is designed to help small high tech businesses. I believe that a substantial number of companies will benefit from this and will make a difference to high tech companies as they develop their innovative research. Obviously publicising these changes will help to change the culture in this country. For example: corporate venturing is something that is done badly in the past and America does particularly well, the minute we published this we had a number of countries saying that they were considering corporate venturing schemes in the UK.'



Vincent Watts, Chairman, East of England Development Agency - 'Chancellor you have introduced some of the components for an invest in success programme but the one thing our region really needs is a competitive infrastructure. We would suggest that you ought to be thinking about a modest programme which is focussed at ensuring some of the key infrastructure improvements are made.'



Chancellor's response: 'You will see some new announcements over the next few months on how we plan to proceed. It is clear that investment in transport requires effective public-private partnership and clear that government will have to invest more. We do recognise that in high growth areas the inadequate development of our transport system is a barrier we have to overcome.'



Caroline Edmonds from the Babraham Institute - (public sector research institute trying to set up a mini biotech cluster at Babraham) - 'Wonder if you can extend the principles of the Baker report to land reform and ownership. So that we have a sufficiently long lease on land to ensure that we can make greater value from our public investment.'



Chancellor's response: 'I will take back your comments and consider them in more depth.'



David Cleevely, MD and Founder of Analysys Limited -'Are you doing enough?'



Chancellor's response: 'In our first two years in government, the most important thing was to create a framework for monetary and fiscal stability and the most important single decision was to make the Bank of England independent. This has given stability and long term inflation expectation of 2.5%. This gives new certainty and helps long term investment. Now the priority is to reduce the barriers to productivity.'



Alex van Someren, nCipher Corporation, Internet Security Business - 'We welcome your intended change of direction with regard to employee share ownership. You spoke this morning about reconciling fairness in organisational structures. I am concerned about proposals which will enable the employees to buy shares more readily but that a sub set of those managers should selectively be able to benefit from employee share options grants. This is more divisive than your statements suggest. Perhaps you could help us to understand about that reconciliation.'



Chancellor's response: 'The scheme is for all employees, and companies will only qualify if it is for all employees and it is a generous scheme. There is one additional scheme which is quite different and that is for small companies in high risk enterprises trying to secure managers usually from larger companies where there is security of employment and certainty of remuneration. It is in these circumstances that we are allowing this tax relief to be available for management incentives. The value is very high. '



Caroline Swift, CHASE- 'Some enterprises are looking for 2-300,000 and often this comes below the criteria that Business Angels are looking for. Also what provision have you made for front end tax relief. You have recently said that in connection with Business Angels that they have to have to be able to say they are worth 75,000 to 100,000 excluding their main residence, how will you be able to check on this?'



Chancellor's response: 'There is a new proposal for a fund for micro loans for the smallest of businesses, the details of which have not be announced. I will take a note of the points you have made but expect an announcement very soon.'



Terry Parker, MD Ridgeon Group Limited supplier of building material in the Eastern Region. - 'The Monetary Committee seem concerned about inflation in house prices. The only weapon that is currently used to fight them is interest rates, and these have a knock on effect in the whole industry. Are there any plans to try stabilise the current situation without resorting to that single weapon and without driving the construction industry back into recession?'



Chancellor's response: 'I don't accept that interest rates are the only weapon we use to manage the economy. We have interest rates at the moment of less than 5.5% and any management that is being done by the Bank of England in relation to interest rates is preemptive it is designed to avoid a return to the sort of conditions that lead to the huge hikes in interest rates that we have seen in every previous economic cycle. Small adjustments are better than allowing ourselves the risk of returning to the stop go condition of the past and we have created a monetary and fiscal framework, with disciplines that reflect a world economy. I would support the Bank of England in the difficult decisions it has to make.'



Mike Perkins - PriceWaterhouseCoopers - 'Are there any plans to encourage the location of new business?'



Chancellor's response: 'Yes and there is a pre-budget consultation designed to listen to people's views on this. We now have the lowest corporate tax rate of any of the industrialised countries. And in terms of capital gains tax we are prepared to go further introducing the long term rate of 10p with the taper making it available after five years of investment.'



See also